Good COP, Bad COP: What is COP?

COP stands for ‘conference of the parties’, using parties in the sense of countries signed up to something. In this case the ‘parties’ are countries that have signed up to the United Nations Framework Convention on Climate Change (UNFCCC).

The climate emergency is obviously a global issue. There is no point in some countries taking action if others don’t. And worse, without agreements, countries will resist taking action that they think might make them uncompetitive relative to countries that are not taking action. So international negotiations are vital to tackle the climate emergency.

There is a COP every year and has been for nearly three decades. Some stand out for either success or failure. Some are more under the radar. The 26th COP was held in Glasgow in November 2021 and COP27 will be held in Sharm-el-Sheikh in Egypt in November 2022.

COP15, held in Copenhagen, is remembered for a well-intentioned negotiation that ended in failure. The world would be in a much better place now had it succeeded but a poor negotiating atmosphere together with a failure by world leaders to take the climate issue seriously put the world back by a decade.

Conversely, COP21, held in Paris in 2015, achieved a breakthrough, know as the Paris Agreement. This included a commitment to limit global warming to ‘well below 2 degrees and aim for 1.5 degrees’ and to ensure that sufficient finance was found to achieve this aim. The Agreement revolves around the idea of each country bringing forward a national plan setting out by how much they would reduce their CO2 emissions; these plans are known as Nationally Determined Contributions, or ‘NDCs’. Countries agree that they would meet again every five years to discuss what they had done to meet these plans and to upgrade their ambitions.

COP26 was six years after Paris – the five years that were planned and additional year because of Covid. So it was the first chance for world leaders to discuss what they had achieved and commit to more urgent action – backed up by finance.

Climate finance has come to have a specific meaning in the context of the global climate negotiations conducted by the UN under the COP. UNFCCC defines climate finance as ‘local, national or transnational financing—drawn from public, private and alternative sources of financing—that seeks to support mitigation and adaptation actions that will address climate change.’

It also notes that the two international climate treaties that have been agreed – the Kyoto Protocol (1997) and the Paris Agreement (2016) – have both called for those countries with greater financial power to provide financial resources to lower-income countries. And it notes that such finance should be directed towards both mitigation and adaption. Mitigation means activities aimed at preventing additional climate impacts, so installing renewable energy generation. Adaptation means investing to insulate citizens, infrastructure, and other creatures against the climate impacts that cannot now be avoided.

This definition provides a neat framework for this chapter where we consider how to fund the transitional investments needed to address the climate emergency, whether that financing should be public or private, and what it should best be invested in.

The UNFCCC is clear that while climate finance is finance ‘that aims at reducing emissions and enhancing sinks of greenhouse gases [or adaptation to] negative climate change impacts’, it may be public or private. The UNFCCC is clear that private finance should only be used for projects that benefit the community and economy but do not yield revenue streams for private investors. In other words, private financiers should not be able to profit from climate investment.

As far back as the 2009 Copenhagen COP, the world’s more economically powerful countries pledged $100bn in climate finance to the countries of the Global South. An academic analysis of this promise published in Nature finds that it was so ill-defined as to be impossible to hold countries to. A promise made in haste to prevent the walkout of the countries more vulnerable to climate change has proved a poor basis to ensure they are compensated for their immense losses.

However, as we will see in the section on Loss and Damage, there are now so bilateral attempts to finance climate investments in the low-income countries by those countries that are more responsible for causing the climate crisis.